Fiduciary Duties of Directors When Managing Intellectual Property

Donner, Irah H. | January 1, 2016

The law covering corporate director duties pertaining to management of intellectual property assets is evolving, making it important for directors to remain up-to-date on any and all changes in management procedures and best practices. Generally, courts treat intellectual property assets like any other corporate asset, which means directors must approach intellectual property with the same due care as they would any other asset. For example, directors must be informed of the value of their intellectual property and always remember their duty of loyalty to their shareholders. Similarly, courts require directors to implement necessary internal controls to protect their corporation’s intellectual property assets. Finally, directors must refrain from misappropriating intellectual property. Recent cases include DuPont v. Medtronic Vascular, where the Superior Court of Delaware acknowledged that corporate officers and directors may have an affirmative duty to monetize their corporation’s intellectual property, including the use of litigation if necessary.Furthermore, the Securities and Exchange Commission recently filed a complaint against CytoGenix Corporation, its president, Lex Cowsert, and a board member, Christopher Plummer, claiming the defendants lied to investors by issuing false press releases associated with an influenza vaccine’s development when the corporation had already lost all of its patents in a prior lawsuit.